The purpose of the Michigan Turfgrass Foundation, Inc. is to provide grants and scholarships to further the study and research of turfgrass management. The majority of this study and research is conducted at various facilities owned and operated by Michigan State University. The Foundation is incorporated as a Non-Stock, Non-Profit Corporation and has been granted tax-exempt status under Internal Revenue Code Section 501(c)(3).

This Statement of Investment Policy is set forth by the Board of Directors of the Michigan Turfgrass Foundation, Inc. in order to:

1. Define and assign the responsibilities of all involved parties.

2. Establish a clear understanding for all involved parties of the investment goals and objectives of Fund assets.

3. Offer guidance and limitations to all Investment Managers regarding the investment of Fund assets.

4. Establish a basis for evaluating investment results.

5. Manage Fund assets according to prudent standards as established in common trust law.

6. Establish the relevant investment horizon for which the Fund assets will be managed.

In general, the purpose of this statement is to outline a philosophy and attitude which will guide the investment management of the assets toward the desired results. It is intended to be sufficiently specific to be meaningful, yet flexible enough to be practical.

DELEGATION OF AUTHORITY

The Board of Directors of the Michigan Turfgrass Foundation, Inc. is a fiduciary, and is responsible for directing and monitoring the investment management of Fund assets. As such, the Board of Directors is authorized to delegate certain responsibilities to professional experts in various fields. These include, but are not limited to:

2. Investment Manager. The investment manager has discretion to purchase, sell, or hold the specific securities that will be used to meet the Fund's investment objectives.

3. Custodian.The custodian will physically (or through agreement with a sub-custodian) maintain possession of securities owned by the Fund, collect dividend and interest payments, redeem maturing securities, and effect receipt and delivery following purchases and sales. The custodian may also perform regular accounting of all assets owned, purchased, or sold, as well as movement of assets into and out of the Fund accounts.

The Board of Directors will not reserve any control over investment decisions, with the exception of specific limitations described in these statements. Managers will be held responsible and accountable to achieve the objectives herein stated. While it is not believed that the limitations will hamper investment managers, each manager should request modifications which they deem appropriate.

If such experts employed are also deemed to be fiduciaries, they must acknowledge such in writing. All expenses for such experts must be customary and reasonable, and will be borne by the Fund as deemed appropriate and necessary.

DEFINITIONS

1. The Michigan Turfgrass Foundation, Inc. Investment Portfolio is segregated into two separate pools of assets:

"Fund" shall refer to both the Restricted Funds and the General Funds, unless otherwise noted.

2. "Board of Directors" shall refer to the governing board established to administer the Fund.

3. "Fiduciary" shall mean any individual or group of individuals that exercise discretionary authority or control over fund management or any authority or control over management, disposition or administration of the Fund assets.

4. "Investment Manager" shall mean any individual, or group of individuals, employed to manage the investments of all or part of the Fund assets.

6. "Securities" shall refer to the marketable investment securities which are defined as acceptable in this statement.

7. "Investment Horizon" shall be the time period over which the investment objectives, as set forth in this statement, are expected to be met.

The Investment Horizons for the separate portfolios that comprise the Michigan Turfgrass Foundation, Inc. are as follows:

Restricted FundsFounder’s Society Fund: 10 Years or GreaterEndowment Fund: 10 Years or GreaterProfessors Endowment Fund: 10 Years or Greater

General FundsOperations Fund: 3 Years or LessLonger-Term Investment Fund: 3 - 5 Years

ASSIGNMENT OF RESPONSIBILITY

Responsibility of the Board of Directors of the Michigan Turfgrass Foundation, Inc.

The Board of Directors is charged by law with the responsibility for the management of the assets of the Fund. The Board of Directors shall discharge its duties solely in the interest of the Fund, with the care, skill, prudence and diligence under the circumstances then prevailing, that a prudent man, acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims. The specific responsibilities of the Board of Directors relating to the investment management of Fund assets include:

1. Projecting the Fund's financial needs, and communicating such needs to the Investment Managers on a timely basis.

2. Determining the Fund's risk tolerance and investment horizon, and communicating these to the appropriate parties.

3. Establishing reasonable and consistent investment objectives, policies and guidelines which will direct the investment of the Fund's assets.

5. Regularly evaluating the performance of the Investment Manager(s) to assure adherence to policy guidelines and monitor investment objective progress.

6. Developing and enacting proper control procedures: For example, replacing Investment Manager(s) due to fundamental change in investment management process, or failure to comply with established guidelines.

Responsibility of the Investment Consultant(s)

The Investment Consultant's role is that of a non-discretionary advisor to the Board of Directors of the Michigan Turfgrass Foundation, Inc.. Investment advice concerning the investment management of Fund assets will be offered by the Investment Consultant, and will be consistent with the investment objectives, policies, guidelines and constraints as established in this statement. Specific responsibilities of the Investment Consultant include:

1. Assisting in the development and periodic review of investment policy.

2. Conducting investment manager searches when requested by the Board of Directors.

3. Providing "due diligence", or research, on the Investment Manager(s).

4. Monitoring the performance of the Investment Manager(s) to provide the Board of Directors with the ability to determine the progress toward the investment objectives.

5. Communicating matters of policy, manager research, and manager performance to the Board of Directors.

6. Reviewing Fund investment history, historical capital markets performance and the contents of this Investment Policy Statement to any newly appointed members of the Board of Directors.

Responsibility of the Investment Manager(s)

Each Investment Manager must acknowledge in writing its acceptance of responsibility as a fiduciary. Each Investment Manager will have full discretion to make all investment decisions for the assets placed under its jurisdiction, while observing and operating within all policies, guidelines, constraints, and philosophies as outlined in this statement. Specific responsibilities of the Investment Manager(s) include:

1. Discretionary investment management including decisions to buy, sell, or hold individual securities, and to alter asset allocation within the guidelines established in this statement.

3. Communicating any major changes to economic outlook, investment strategy, or any other factors which affect implementation of investment process, or the investment objective progress of the Fund's investment management.

5. Voting proxies, if requested by the Board of Directors, on behalf of the Fund, and communicating such voting records to the Board of Directors on a timely basis.

GENERAL INVESTMENT PRINCIPLES

1. Investments shall be made solely in the interest of the beneficiaries of the Fund.

2. The Fund shall be invested with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the investment of a fund of like character and with like aims.

3. Investment of the Fund shall be so diversified as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.

4. The Board of Directors may employ one or more investment managers of varying styles and philosophies to attain the Fund's objectives.

5. Cash is to be employed productively at all times by investment in short-term cash equivalents to provide safety, liquidity, and return.

INVESTMENT MANAGEMENT POLICY

1. Preservation of Capital - Consistent with their respective investment styles and philosophies, investment managers should make reasonable efforts to preserve capital, understanding that losses may occur in individual securities.

2. Risk Aversion - Understanding that risk is present in all types of securities and investment styles, the Board of Directors recognizes that some risk is necessary to produce long-term investment results that are sufficient to meet the Fund's objectives. However, the investment managers are to make reasonable efforts to control risk, and will be evaluated regularly to ensure that the risk assumed is commensurate with the given investment style and objectives.

3. Adherence to Investment Discipline - Investment managers are expected to adhere to the investment management styles for which they were hired. Managers will be evaluated regularly for adherence to investment discipline.

GOAL OF FOUNDATION

The Board of Directors feels that grants to be made in the future are as important as grants made today. This is consistent with the philosophy that this Foundation is to exist in perpetuity, and therefore, should provide for grant making in perpetuity. To attain this goal, the overriding objective of this foundation is to maintain purchasing power. That is, net of spending, the objective is to grow the aggregate portfolio value at the rate of inflation over the Foundation's investment horizon. The Foundation's specific investment objectives will be established later in this document.

ATTITUDE TOWARD GIFTS

Future giving to this Foundation is expected to be relatively consistent and predictable. The investment strategy of the Fund is designed so that:

Giving + Total Return = Spending + Inflation + Expenses.

This strategy states that the sources of funds (giving and return) will offset uses of funds (spending, inflation and expenses) and that the fund is expected to maintain purchasing power.

INVESTMENT OBJECTIVES

In order to meet its needs, the investment strategy of the Michigan Turfgrass Foundation, Inc. is to emphasize total return; that is, the aggregate return from capital appreciation and dividend and interest income.

CAPITAL MARKETS EXPECTATIONS

The specific investment goals below are based on the following expectations of return from the capital markets: (Reflects returns from 12/45 – 12/06)

Income & Growth - To achieve a balanced return of current income and modest growth of principal.

Over the investment horizon established in this statement, it is expected that the aggregate Restricted Fund assets will meet or exceed, on a net basis:

The rate of inflation (as measured by the Consumer Price Index) by 3.5%.

The return of a balanced market index comprised of a comparable blend of equity and fixed income indices.

B. General Funds: Longer-Term Investment Funds

Specifically, the primary objective in the investment management for General Fund assets shall be:

Long-Term Growth of Capital - To emphasize long-term growth of principal while avoiding excessive risk. Short-term volatility will be tolerated inasmuch as it is consistent with the volatility of a comparable market index.

Over the investment horizon established in this statement, it is expected that the aggregate General Funds’ Longer-Term Investment Fund assets will meet or exceed, on a net basis:

The rate of inflation (as measured by the Consumer Price Index) by 3.0%.

The return of a balanced market index comprised of a comparable blend of equity and fixed income indices.

The investment goals above are the objectives of the aggregate Fund, and are not meant to be imposed on each investment account (if more than one account is used). The goal of each investment manager, over the investment horizon, shall be to:

1. Meet or exceed the market index, or blended market index, selected and agreed upon by the Board of Directors that most closely corresponds to the style of investment management.

2. Display an overall level of risk in the portfolio which is consistent with the risk associated with the benchmark specified above. Risk will be measured by the standard deviation of quarterly returns.

Specific investment goals and constraints for each investment manager, if any, shall be incorporated as part of this Statement of Investment Policy. Each manager shall receive a written statement outlining his specific goals and constraints, as they differ from those objectives of the entire Fund.

VOLATILITY OF RETURNS

The Board of Directors understands that in order to achieve its objectives for Fund assets, the Fund will experience volatility of returns and fluctuations of market value. It states that the Restricted Funds could tolerate a maximum loss of 15% over any one-year period, and a maximum loss of 0% over the investment horizon. Additionally, the General Funds’ Longer-Term Investment Fund could tolerate a maximum loss of 10% over any one-year period, and a maximum loss of 0% over the time horizon. Therefore, the Board of Directors supports an investment strategy that minimizes the probability of losses greater than stated above. However, it realizes that the Fund's return objective is its primary concern. There is, of course, no guarantee that the Fund will not sustain losses greater than those stated herein.

LIQUIDITY

To minimize the possibility of a loss occasioned by the sale of a security forced by the need to meet a required payment, the Board of Directors will periodically provide investment counsel with an estimate of expected net cash flow. The Board of Directors will notify the investment consultant in a timely manner, to allow sufficient time to build up necessary liquid reserves. The General Funds’ Operations Fund should maintain a minimum of $200,000 in cash equivalents at all times in order to meet operating needs.

MARKETABILITY OF ASSETS

The Board of Directors requires that all Fund assets be invested in liquid securities, defined as securities that can be transacted quickly and efficiently for the Fund, with minimal impact on market price.

4. Mutual FundsMutual Funds which invest in securities as allowed in this statement.

5. Other AssetsReal Estate Investment Trusts (REITs)

Stock Exchanges

To ensure marketability and liquidity, investment advisors will execute equity transactions through the following exchanges: New York Stock Exchange; American Stock Exchange; and NASDAQ over-the-counter market. In the event that an Investment Manager determines that there is a benefit or a need to execute transactions in exchanges other than those listed in this statement, written approval is required from the Board of Directors.

Prohibited Assets

Prohibited investments include, but are not limited to, the following:

The Board of Directors has adopted the following policy on derivative securities:

Unless a specific type of derivative security is allowed in the statement of investment policy, the Investment Manager (s) must seek permission from the Board of Directors to include derivative investments in the Fund's portfolio. The Investment Manager (s) must present detailed information as to the expected return and risk characteristics of such investment vehicles.

Prohibited Transactions

Prohibited transactions include, but are not limited to, the following:

1. Short Selling2. Margin Transactions

Asset Allocation Guidelines

Investment management of the assets of the Michigan Turfgrass Foundation, Inc. shall be in accordance with the following asset allocation guidelines: